The Ministry of Finance has notified that the Unified Pension Scheme (UPS) will be an option under the National Pension System (NPS) for central government employees and will provide assured payouts.
The OPS ensures a pension of 50 per cent of the last drawn salary after retirement without any employee contribution, whereas under UPS, employees must contribute 10 per cent of their basic salary, with the government contributing 18.5 per cent
The Ministry of Finance has notified that the Unified Pension Scheme (UPS) will be an option under the National Pension System (NPS) for central government employees and will provide assured payouts.
The scheme will come into effect from April 1, 2025, and will offer assured payouts to employees.
However, some employee unions want the old pension system (OPS) restored. The OPS guarantees a pension equivalent of 50 per cent of the last drawn salary after retirement. Under OPS there was no need for any monthly contribution from employees. However, in UPS, employees need to contribute 10 per cent of their basic monthly salary while the government will contribute 18.5 per cent.
Who Is Eligible
The scheme will apply to central government employees who come under NPS and who opt for NPS. Here are some conditions that need to be met.
The employee has served for 10-plus years and has taken superannuation
For employees who have taken premature retirement under FR 56(j) without penalty
For employees who have taken voluntary retirement after completing 25 years of service. Here, the payout will begin from the notional superannuation date
It must be noted that assured payouts will not apply in cases of resignation, dismissal, or removal from service.
How Payouts Will Be Calculated
The calculator of payouts will be based on the years in service.
Full Assured Payout: Employees who have served for at least 25 years will get an assured pension of 50 per cent of their average basic pay over the last 12 months.
Proportional Payout: This will apply to employees proportionately, based on their years of service.
Minimum Guaranteed Pension: Employees who have served for at least 10 years will get a minimum payment of Rs 10,000 per month.
Other Benefits Of UPS
The UPS scheme also assured government employees a ‘periodic dearness relief’ which is similar to a dearness allowance for serving employees. Also, a family pension of 60 per cent of the government’s employee pension in case of a member’s demise will be provided.
Plus there will be a lump sum superannuation at the time of retirement, The lump sum is calculated as one-tenth of the employee's last drawn monthly pay for every six months of service.This payment is in addition to gratuity and does not reduce the amount of the pension.